2. CCSR-HRSR 09-04-2012 SPEC JOINT

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EXECUTIVE SUMMARY For-Sale Housing Market Analysis • The average and median resale price of homes in Elk River was approximately $160,120 and $150,000 respectively as of May 2012. The median sales price over the last decade peaked in 2005. Since 2005, median sales prices have declined by over 36%. • An average of 412 homes has been sold annually in Elk River since 2000. Considering that Elk River has a supply of nearly 6,500 owned homes in 2010, this represents turnover of almost 6% of the owned homes annually. • The median list price of homes for sale in Elk River was about $181,900 in June 2011. Based on a median list price of$181,900, a household would need an income of about $49,790 in order to afford to make monthly housing payments of about $1,245 (assuming a 10% down payment, 3.75% 30-year fixed mortgage). A household with significantly more equity (in an existing home and/or savings) could put more than 10% down and afford a higher priced home. About 79.5% of Elk River households have annual incomes at or above $49,790. • As of July 2012, Elk River had a total of over 400 vacant lots within 28 subdivisions. All of the subdivisions were platted between 2000 and 2006. Nearly 40% of the lots were platted in 2002, and another 43% of the lots were platted between 2004 and 2005. • There are 14 subdivisions actively marketing lots at this time. Combined, there are about 150 lots available. Lot prices range from approximately $18,000 to $80,000 with an average lot cost is about $40,000. • The lot supply benchmark for growing communities is a three-to five-year lot supply. This supply of lots is appropriate as it provides adequate consumer choice but minimizes developers' carrying costs. Given the number of existing platted lots and the annual absorption of single-family lots over the past few years, we conclude that Elk River is currently oversupplied through the decade. Housing Needs Analysis • Based on our calculations, demand exists for the following general occupancy product types between 2012 and 2017: o Market rate rental 81 units o Affordable rental 40 units o Subsidized rental 9 units o For-sale single-family 16 units o For-sale multifamily 0 units • In addition, we find demand for multiple senior housing product types. By 2017, demand for senior housing is forecast for the following: MAXFIELD RESEARCH INC. 8